BILL ANALYSIS C.S.S.B. 1236 By: Armbrister State Affairs 03-30-95 Committee Report (Substituted) BACKGROUND Current law governs certain relationships between beer manufacturers and beer distributors by requiring manufacturers to designate territories in this state where distributors may distribute and sell brands produced by beer manufacturers. The law currently stipulates that beer manufacturers may enter into agreements with distributors which provide for exclusive territorial assignments, a common practice in the U.S. following the Supreme Court's ruling relative to exclusive territories in Continental T.V., Inc. vs GTE Sylvania, 433, U.S. 36 (1977). PURPOSE As proposed, C.S.S.B. 1236 provides for the sale of beer within assigned territories. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 102.51(b), Alcoholic Beverage Code, to prohibit a manufacturer from assigning all or a part of the same sales territory to more than one distributor. SECTION 2. Amends Chapter 102C, Alcoholic Beverage Code, by adding Sections 102.54 and 102.55, as follows: Sec. 102.54. ADDITIONAL REQUIREMENTS FOR APPLICANTS FOR DISTRIBUTOR'S LICENSE. (a) Sets forth provisions the Texas Alcoholic Beverage Commission or administrator (commission) shall require an applicant for the license or a holder of the license to show, in addition to any other requirements necessary for the issuance or renewal of a distributor's license. (b) Sets forth provisions the commission or administrator may require the applicant or holder to show, in determining whether an applicant for or holder of a distributor's license meets the requirement of Subsection (a)(5). (c) Requires the commission or administrator to refuse to approve an application for a distributor's license or to refuse to renew a distributor's license if the commission or administrator finds the holder or applicant has failed to comply with any of the requirements of Subsection (a) or (b). (d) Defines "distributor," "manufacturer," and "retailer." Sec. 102.55. TERRITORIAL ASSIGNMENTS; DEFINITIONS. (a) Defines "brand" and "brand extension" as the terms relate to an agreement between a manufacturer and a distributor describing the sales territory in which a distributor may sell the beer of the manufacturer. (b) Provides that a brand extension is not a new or different brand. (c) Requires a manufacturer to assign a brand extension to the distributor to whom the brand was originally assigned, if the distributor to whom the brand was originally assigned, if the distributor elects to distribute a sell the brand extension. SECTION 3. (a) Provides that a territorial agreement in effect on March 22, 1995, between a manufacturer and a distributor in which a manufacturer has not assigned all or part of a territory to more than one distributor is considered to be an enforceable agreement requiring a manufacturer to not assign any part of the assigned territory to more than one distributor. (b) Provides that a territorial agreement in effect on March 22, 1995, in which a manufacturer has previously assigned all or part of the same sales territory to more than one distributor is not affected by the amendment to Section 102.51, Alcoholic Beverage Code, enacted by Section 1 of this Act. Provides that a territorial agreement in effect on March 22, 1995, in which a manufacturer has previously assigned all or part of the same sales territory to more than one distributor is governed by Section 102.51, Alcoholic Beverage Code. SECTION 4. Emergency clause. Effective date: upon passage.